Skip to main content
UploadLanguage (EN)Support
BusinessMobileSocial MediaMarketingTechnologyArt & PhotosCareerDesignEducationPresentations & Public SpeakingGovernment & NonprofitHealthcareInternetLawLeadership & ManagementAutomotiveEngineeringSoftwareRecruiting & HRRetailSalesServicesScienceSmall Business & EntrepreneurshipFoodEnvironmentEconomy & FinanceData & AnalyticsInvestor RelationsSportsSpiritualNews & PoliticsTravelSelf ImprovementReal EstateEntertainment & HumorHealth & MedicineDevices & HardwareLifestyle
NC
Uploaded byNarudh Cheramakara
PPTX, PDF5,340 views

Airline Marketing 3. the airline markets

This document discusses airline market segmentation. It begins by explaining the airline business model, including transportation of passengers and cargo, and how technology has impacted communication and logistics. It then discusses the different types of airline customers, including consumers, passengers, and decision-makers within business travel. Key factors that influence customer decisions are also outlined, and the document emphasizes the difference between apparent and true customer needs. The rest of the document focuses on market segmentation strategies for airlines, including segmenting by travel purpose, journey length, traveler origin, and customer requirements. Business and leisure travelers are specifically compared in terms of demand elasticity and airline preferences.

Travel◦
Downloaded 89 times
Airline Marketing 3: The Airline Market Dr Narudh Cheramakara Bangkok University 1/2017
1. What is airline business? 1.1 Transportation - A mode of air transport - From A-B - Speed v Cost - Consider the case of Airline and High Speed Train - Or Consider A flight to Korat - Taiwan Domestic Air Transport - Eurostar = More expensive / Faster
1. What is airline business? 1.2 Communication Airlines are increasingly being competed with online technology - Replacing face-to-face communication - Video conference - Email
1. What is airline business? 1.3 Leisure – Competing on fares 1.4 Logistics – Air freights /Business Documents - Business documents have – to a certain extent – replaced by email and digital technology - Air Freights can be seen as ancillary revenues from the passenger flights - Boom in online shops can result in increase in air cargo demand 1.5 Selling Service = Asian Airlines are famous for hospitality / Middles East for Hard products (seats, IFEs)
2. Who are the airline customers? • Consumers v Customers • Consumer = Passengers • Customer = Decision Makers - It is important that effective marketing understands and adjust their marketing strategy accordingly. - Who is the decision maker for your trip? • There are at least four customer decisions which must be analysed:
2. Who are the airline customers? 2.1 Will a trip be made at all? - The cost (and benefits) consideration for firms. - What are the alternatives? - The management has the final say on whether the trip should go ahead (therefore they are the decision maker)
2. Who are the airline customers? 2.2 What mode of transport will be selected? - Speed (Including travel time to/from the airport) - Cost - Comfort E.g. for family trip, the customer might be the family member who has most influence in travel decisions.
2. Who are the airline customers? 2.3 For air trips, what class of service will be purchased? - Depending on Corporate Travel Policy: Seniority Based (Nok Air Case) - This can change during recessions – Downgrading to save - For leisure – Depending on Budget (Premium Economy Example)
2. Who are the airline customers? 2.3 For air trips, what class of service will be purchased? - Depending on Corporate Travel Policy: Seniority Based (Nok Air Case, Thai Government) - This can change during recessions – Downgrading For leisure – Depending on Budget (Y+ Class) - There are trends in First Class Abolisions
2. Who are the airline customers? 2.4 Which airline will be selected? Business Travellers –governed by corporate travel policy - Cost - Risk Management (Polish Presidential Aircraft Accident, Burundi and Rwanda Presidents) - Safety Audit - Thai Government Official on TG Leisure Travellers - Sometimes chosened by tour operators (particularly true in China case) - Imagine you are travelling with a group of friends, who is the decision maker?
3. Apparent v True need • In marketing research – customers are often asked about the factors for deciding to buy a ticket – This may not always be the truth (Sometimes they may answer with the acceptable answers to save the face) • This means there are differences between the apparent and true needs • For example, they might stated that they choose airline because of service, frequency but in fact they earn FFPs on the surveyed airline.
3. Apparent v True need Cont’d • Dedicated Check-in/Call centre line: Benefits v Ego - It may be the benefits (Apparent need) for faster experience - But in terms of True need, it’s actually for the pride and ego of passengers who wanted to be seen as being treated better (being exclusive) - “True Needs” in marketing can cover other aspects as well. Some customers might, for example, be lazy and prefer to keep purchasing from an existing supplier rather than make the effort to change even if such a change might result in better value-for-money. Others might be riskaverse, preferring to stay with a tried-and- tested solution rather than an alternative (People who always fly TG for example)
3. Apparent v True need Cont’d • “True Needs” are at the heart of successful marketing. In many ways they reflect the weaknesses of the human personality. • They are also relatively constant in their importance through time. No-one who is concerned to make a success of an airline’s marketing activities should make the mistake of assuming that a declared customer requirement is actually a true description of what is motivating purchasing decisions.
4. Industrial Buying Behaviours • In Consumer Marketing it is usually possible with confidence to target the individual or the family. In contrast, in Industrial Marketing, purchasing decisions will often be made in a complex way with different corporate executives interacting in different ways through a so-called Decision-Making Unit or DMU. • Must understand ‘apparent’ and ‘true’ needs of each DMU
4. Industrial Buying Behaviours: DMUs 1. Deciders - People who make final decision - Apparent need: buying in the best interest for the firm - True need: There may be hidden agenda (Bribes, corporate entertainment) or they can be risk averse for fear of losing jobs
4. Industrial Buying Behaviours: DMUs 2. Gatekeepers - People who control the flow of information into the Decision-Making Unit. - Decider’s secretary or Personal Assistant: They can stop timewasting from unwanted sale person, etc.
4. Industrial Buying Behaviours: DMUs 3. Users - The passenger (company’s employee, management) - Care about the products and benefits than cost. - They will lobby the “Decider” (commonly an executive with a job title such as Corporate Travel Manager) to use airlines with superb products and services with FFPs
4. Industrial Buying Behaviours: DMUs 4. Buyers - People who negotiate the final deal with the different airlines - In terms of true needs: Job security, risk averse
4. Industrial Buying Behaviours: DMUs 5. Influencers Influencers are those people who do not use a product, or become involved in detailed negotiations with suppliers, but who do influence the final outcome of the buying process. - Influencers can come from both outside and inside a firm. May be a domestic partner of the user/decider - Online influencer, reviews etc. Very important nowadays
5. Market Segmentation • Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub-markets or segments, each of which tends to be homogeneous in all significant aspects. • The purposes of market segmentation • Market segmentation is conducted for two main purposes, including: - A better allocation of a firm's finite resources (which are limited) - To better serve the more diversified tastes • Segmentation can be defined in terms of the STP acronym, meaning Segment, Target, Position.
5. Market Segmentation Cont’d 1. Segment • Segmentation involves the initial splitting up of consumers into persons of like needs/wants/tastes. • Geographical (a country, region, city, town, etc.) • Psychographic (e.g. Lifestyle, personalities, beliefs) • Demographic (e.g. age, gender, socio-economic class, education, etc.) • Behavioural (e.g. brand loyalty, usage rate, buying channal etc.)
5. Market Segmentation Cont’d 2. Target - Discernable - how a segment can be differentiated from other segments. - Accessible - how a segment can be accessed via Marketing Communications - Measurable - can the segment be quantified and its size determined? - Profitable - ROI? Is it worthwhile? • The next step in the targeting process is the level of differentiation involved in a segment serving. Three modes of differentiation exist, • Undifferentiated - same product for all of a market segment • Differentiated - slight modifications of a product within a segment • Niche - in which an organisation forges a product to satisfy a specialised target market 3. Position 3. Positioning concerns how to position a product in the minds of consumers.
BA Differentiate/Niche Market: Sleeper/A318
6. Segmentation for Airlines 1. Purpose of Journey: Business Leisure VFR Nok Air Case: 40 20 40% + Hajj charter flight
6. Segmentation for Airlines Cont’d 2. Length of Journey - Reasons why LCCs works with in 4 hours flying time - Short haul, importance on airport and convenient on the ground - Long Haul, importance in-flights service (IFE, seats) - Still air fare will always an important factor Considering - 1. BKK-CNX TG 4700, FD 2000 - 2. BKK FRA EK 36000, UIA 32000
6. Segmentation for Airlines Cont’d 3. Country/Culture of Origin of the Travellers - Different Requirements: Dietary, Religious, Booking behavior, Linguistics - National Airlines: TG, Thainess, Culture, Linguistic - Global Branding: Emirates, Etihad, Easyjet, Air Asia
• https://www.youtube.com/watch?v=0N3J6fE-0JI Air France Safety Demo
International Airlines
International Airlines
7. Customer Requirements 1. Frequencies and Timing 2. Punctuality 3. Airport Location / Access (London, Bangkok) 4. Flexibility 5. FFP benefits 6. Airport Service 7. Inflight Service
8. Segmentation for airlines cont’d 1) Business - Frequency - Flexibility - Benefits (FFPs, Comfort) - Company pays!!!! - Thai Gov’t, MPs (Freebies, VIP treatments, Front row) - Elasticity of demand:……………. Elastic or inelastic?
8. Segmentation for airlines Cont’d 2) Leisure (+VFR) - Price - Self-paid - Strong seasonal fluctuation - Changing buying behaviours: Travel agents (commission cuts) to direct sales -> Hugh effects on the travel industry - Elastic or inelastic demand? Price sensitivity? - Of the two, which group of passengers do airlines preferred? Why?
Deciding factors (Source: IATA)